RBI grants in-principle approval to Fino Payments Bank for conversion to a small finance bank

Fino Payments Bank net revenue rose 26 per cent to ₹118 crore

The Reserve Bank of India (RBI) granted in-principle approval to Fino Payments Bank for conversion into a Small Finance Bank (SFB). This follows earlier reports by businessline suggesting the regulator would likely greenlight Fino’s application.

The approval aligns with RBI guidelines enabling payments banks controlled by Indian residents and operational for over five years to transition into SFBs. The central bank evaluated Fino’s application under parameters specified in its licensing framework.

This development follows RBI’s recent decisions regarding similar applications. While AU SFB received approval to convert into a universal bank, Jana SFB’s application was returned. Ujjivan SFB’s proposal for universal banking remains under review.

With Fino’s transition, only a handful of major payments banks remain active, including Airtel Payments Bank, Jio Payments Bank, and India Post Payments Bank. Paytm Payments Bank continues operating under restrictions imposed during 2018 due to regulatory compliance issues.

The payments bank model initially aimed to boost financial inclusion through basic transactions and remittances. However, evolving financial infrastructure—including the digital payments boom following demonetization and UPI adoption—has challenged the viability of payment banks. Regulatory constraints limiting deposits to ₹2 lakh per customer and prohibiting lending operations have further narrowed their revenue avenues.

Former RBI Deputy Governor R Gandhi noted, “The revenue model for payments banks has become fundamentally flawed in today’s environment. Sustainability requires transitioning into institutions with broader operational capabilities, like small finance banks.”

Fino’s CEO, Rishi Gupta, stated the SFB license would enable the bank to broaden its product range, serve new customer segments, and establish lending operations. “This transformation allows us to leverage our distribution network while investing in technology and partnerships to scale effectively,” he added.

Published on December 5, 2025